MISC: US$4 billion capex in next five years

KUALA LUMPUR: MISC Bhd, which will be deploying some US$4 billion (RM15.7 billion) in capital expenditure (capex) in the next five years, is looking to sustain its operating profits at current levels this year, while also looking forward to a more upbeat 2019.
“The profit performance for 2018 will come mainly from the its liquefied natural gas (LNG) division and offshore business because all our contracts are locked in,” said the group’s president and CEO Yee Yang Chien at its AGM on Friday.
For the financial year ended Dec 31, 2017, MISC saw its operating profit jump to RM2.73 billion from RM2.23 billion reported in the previous year.
MISC’s full-year net profit shrank 23.2% from RM2.58 billion to RM1.98 billion, while revenue rose 4.6% from RM9.6 billion to RM10.04 billion.
As at Dec 31, 2017, MISC’s fleet consisted of more than 120 owned and in-chartered LNG, petroleum and product vessels, 14 floating, production systems (FPS) and two LNG floating storage units. The fleet has a combined deadweight tonnage capacity of approximately 16 million tonnes.
Given the recovery in crude oil prices, Yee sees good investment opportunities in FPS and offloading and shuttle tankers segments, evidenced by more job opportunities in 2018, hence is expecting a higher number of bids.
“The value of tender is far more than in 2018. The size of tenders we are working on in the (last) three months alone is far greater than 2017. We should get to convert some of them (into contracts),” said Yee while declining to divulge the value of its tender book.
The group has earmarked about US$500 million out of the five-year capex allocation of US$4 billion for potential projects this year.
The funds will be raised by a combination equity and bank borrowings, on a 30%:70% basis.
“Our priority is to chase growth for the future. We are very focused on having a very healthy pipeline of growth performance, which we can lock-in, in 2018, that will drive our profit growth into 2019 and beyond,” Yee added.
Having won two shuttle tankers job in the North Sea, MISC sees many job opportunities in South America, which will fall under the wing of its wholly-owned subsidiary AET Inc Ltd.
On downgrades of share price by analysts, Yee noted that the difficult market conditions has affected the financial performance and stock price performance of industry players.
“We have not been spared from a difficult market, if you look at the stock price performance and the financial performance of our peers, whether in the LNG space, petroleum, heavy engineering or offshore. It has been a blood bath in terms of financial performance. If you compare ourselves again with our peers, we are a lot more resilient but we still get knocked but we are far more resilient,” he explained.
“In terms of stock price performance everyone has taken a beating, relative to our competitors and peers we again have not done too badly,” he added.
MISC Bhd, which is a 62.67% owned subsidiary of Petronas, is involved in LNG shipping , petroleum and product shipping, marine and heavy engineering and offshore businesses, among others.
Last month, MISC came under the radar of the Malaysian Anti-Corruption Commission following an RM109 million corruption allegation involving some of its officers. Investigations are ongoing.